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Sanjib Jha |66 Answers |Ask -Follow

Insurance Expert - Answered on Feb 02, 2023

Sanjib Jha is the CEO of Coverfox Insurance. His expertise includes health and auto insurance. He has over 22 years of experience in the financial sector. He has completed his post-graduation from the Institute of Company Secretaries of India.... more

Question by Prasanna on Jan 24, 2023Hindi

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Hi Sanjib, why do insurance companies push for three and five year motor vehicle insurance? How does it benefit the insurance buyer?

Ans: Hi Prasanna, long term insurance is only mandated for new vehicle as per IRDAI. In a long term policy, a standard agreement is signed due to which the policy's premium will remain unchanged whether you claim in the policy or not.

However in a one year tenure motor policy, you will lose your NCB (no claim bonus) after claim which will increase the premium at the time of renewal.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Question by Anonymous - Jun 11, 2021Hindi

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5. How important is it to buy a top-up policy?

Ans: Top-up policies play the role of an emergency backup policy, when their main health insurance policy cover reaches the threshold of the sum insured. It offers a higher coverage at relatively lesser premium as compared to a base policy with a higher sum insured.

Ever increasing medical inflation and ongoing deadly infection makes it essential to not only have health insurance but also insurance cover with an adequate sum insured.

The need of a specified sum insured can be optimised by breaking it into two policies. One basic and another top up totalling up to sum insured required by you. This option is recommended rather than having a single policy with higher sum insured.

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Sanjib Jha |66 Answers |Ask -Follow

Insurance Expert - Answered on Feb 02, 2023

Question by Prasanna - Jan 18, 2023Hindi

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Dear Sanjib, why do motor insurance companies insist on buying three and five year cover instead of one year? How do consumers benefit from ling-term vehicle insurance? If one buys 5-year cover and files for claim in the 2nd year then how is claim settled and after that does cover remain valid for the next three years? Regards

Ans: Hi Prasanna, Long Term insurance is only mandated for new vehicle as per IRDAI.
In Long Term policy (3+3), a standard agreement is signed due to which the policy's premium will remain unchanged whether you claim in the policy or not.
However in single year motor policy, you will lose your NCB (no claim bonus) after claim which will increase the premium at the time of renewal.
If a person claims in a five year tenure policy, the process of claim will be standard. Post claim, the coverages & premium will remain unchanged.

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Sanjib Jha |66 Answers |Ask -Follow

Insurance Expert - Answered on Feb 02, 2023